LCS 1 risks handover without full combat capability, readiness could slip to 2035

As of June 25, 2026, the Littoral Combat Ship (LCS) project was found to be 7.55 per cent behind schedule, according to the National Audit Department (JAN). In the Auditor General’s Report (LKAN) 2/2026, the department highlighted the delay's potential impact on the Physical Handover (PHO) of LCS 1, which was initially scheduled for Aug 26, 2026, and then revised to Dec 26, 2026.

The report warned that if the PHO occurs on either date, LCS 1 would be handed over without full operational capability, as training and weapon systems have not been completed. The report emphasized that full operational readiness of the LCS project relies on the completion of the Supplementary Contract, which is not expected until December 2035, far beyond the Main Contract's deadline of April 25, 2030.

This delay in the PHO of LCS 1 could also disrupt the PHO schedules for LCS 2 through LCS 5. The Auditor General's Report (LKAN) 2/2026, covering the Federal Government's financial statements for 2025 and activities of government entities, was recently presented in the Dewan Rakyat. JAN stated that an interim audit was conducted to evaluate the project's management, including its progress, contract management, and payments, based on the contract terms and applicable regulations.

JAN recommended that the Ministry of Defence develop a realistic recovery plan, aligning all critical activities under the Main Contract and Supplementary Contracts with the PHO schedule. The department also suggested ensuring conditional acceptance of the vessels clearly outlines the contractor's obligations, completion timelines, and responsibilities until the vessels reach the specified operational capabilities.

Additionally, JAN advised strengthening project monitoring by assigning dedicated officers and setting deadlines for resolving each critical issue until the project's completion.